If you are dealing with the IRS, you may know you need professional assistance. But taxpayers have many choices when it comes to who can help them work with the Internal Revenue Service. Most people assume they need to hire an accountant to deal with tax issues. While this may be true, there are times when what you really need could be a tax lawyer.
When might this be the case? Here are a few situations.
You Need Confidentiality. All tax practitioners who are allowed to practice as professionals before the IRS generally have some rights and responsibility to keep communications private. But the scope and circumstances are much more limited when the professional is not an attorney. Attorney/client privilege extends largely to all discussions with your lawyer, but your accountant may be required to reveal information to other agencies.
You Need to Negotiate. Accountants are trained to 'crunch' the numbers, prepare tax returns, and make correct and legal entries involving finances. But they aren't generally trained negotiators when it comes to legal matters. A CPA, for example, might find an omission on a tax return and recommend amending returns to correct the matter. But an attorney may be aware of any legal issues that such an amendment may cause if not handled properly.
You May Face the Court. The IRS has a tax court and tax cases are seen in the federal court system. If your situation may end up in court, you should get a lawyer on your team as early as possible. Serious charges, such as tax evasion and avoidance or fraud, can carry jail terms as well as high penalties and fees. A CPA alone can't represent you in court, so seek out a professional who can.
You've Had Difficult Communications. One thing that attorneys are highly trained in is the art of communicating with others. They must build cases and win arguments, after all. If you have already had numerous conversations or communications with people at the IRS and feel that it's going nowhere, get a new person involved. Has your accountant also been involved? A skilled CPA may know the tax code and how to correctly report items, but are they the best person to communicate with a government agency? If you're not sure, an attorney may be able to help.
Does your tax issue include any of these situations? If so — or if you suspect they may become a problem — look for a qualified tax lawyer with experience in your particular tax case. It may be one of the best investments you make.